EGX’s newest investors meet their first selloff

How a new generation of retail investors weathered the EGX’s first trading halt in five years: October’s selloff drew three very different reactions from three investors we spoke to. One bought more shares as prices fell, another decided she’d had enough of picking stocks, and the third held enough liquidity to barely feel it.

“It was scary, but I had to remove my emotions from my decision and bought more at the dip,” the first investor tells EnterpriseAM. Shares kept sliding after he bought, then began to recover, and he has no regrets: “It wasn’t fun emotionally, but they were the right decisions in the end.” For him, the selloff was part of the market’s normal ups and downs and a chance to pick up shares on the cheap.

The second investor came out of the selloff with most of her money intact but far less confidence in the market. The 25 October trading halt “made me wary,” she tells us. “It gave me the feeling that the market isn’t as stable as I thought, and my trust in it became iffy.” Her losses were minor, but with the region’s wars still weighing on her outlook, she’s moving her money into funds and gold until she has a clearer sense of what to expect.

The third investor came through relatively unscathed, largely because of what he wasn’t holding. He went into October with more than 40% of his portfolio incash, which left him down just 4% even at the height of the selloff. “I knew the market was bad for people, but for me it was fine,” he tells us. His holdings included EGX30 constituents Elsewedy Electric and Egypt Aluminium, as well as newly listed Korra Energi, which at one point made up 12.7% of all equity trading on the exchange in a single session as it fell 19.93% in mid-October. When prices slipped, he bought more Elsewedy shares to bring down his average cost. He then sold out anyway, mostly because of the regional war and developments abroad, so he was already out by the time stocks began to recover.

For all their different reactions, the three investors had one important thing in common: none of them borrowed to invest or put in money they’d need back soon, which allowed them to make decisions without repayments looming. The third investor says he pays his installments from his fixed salary and invests what’s left. Analysts fear much of the EGX’s retail crowd lacks that cushion, which could make a drawn-out slump a far harder test than October.

IN CONTEXT- Individuals have set prices on the EGX day to day for most of this year, accounting for 72.7% of gross trading in listed stocks in 1H 2026, while the institutional money that would normally balance them has largely stayed away. That left a big question hanging over the rally: how would a generation of investors who had never been through a market-wide halt react when the market finally turned? The test came on 25 October, when trading stopped for half an hour after the EGX100 fell 10%, the first market-wide suspension since October 2021.

The broader retail base behaved more like the first investor. Individuals ended October as net buyers of EGP 4.14 bn of listed shares, excluding block trades, while institutions were net sellers of the same amount. What worries analysts is investors carrying debt or relying on money they’ll need back soon, since upcoming repayments could leave them little room to ride out another downturn.

The cracks beneath the data

Retail investors dominated trading through October, accounting for 74.9% of open-market turnover against 25.1% for institutions, by our math. Beneath the headline numbers, smaller stocks fell far harder than the benchmark. Even so, Menthum co-founder and CEO Himanshu Shrimali thinks the damage could have been worse. “It’s not as bad as one would have imagined if people had really, really panicked,” he tells EnterpriseAM. He calls the month a pause the market needed after a five-year run and says it held up better than he’d expected.

Leverage made things worse further down the market. “Margin calls tend to concentrate in the sharpest sessions and in the most actively traded mid- and small-caps,” Okaz Asset Management Managing Director Randa Hamed tells us. That’s where October’s heaviest losses were: the EGX70 fell 9.91% over the month, against 4.43% for the benchmark. Part of that gap is sentiment, and part of it, by Hamed’s account, is brokers closing positions once the collateral ran out.

SOUND SMART- Thin freefloats are why small- and mid-caps swing so much further on the same money. Only a fraction of a typical EGX company’s shares actually trade, against 40-50% for a comparable US-listed name, Shrimali says. The EGX also lacks the algorithmic trading and options market that absorb some of that volatility elsewhere, though algo trading is starting to arrive: EFG Hermes launched Younit earlier this month, the first platform to give Egyptian retail investors algorithmic trading through APIs, allowing traders to automate strategies and backtest them against historical data before going live.

The third investor saw the split between the small-cap selloff unfold in the Facebook and WhatsApp trading groups he follows. He says losses there were enormous, concentrated in the EGX70 and in names with heavier retail ownership, while his own EGX30 positions held up. All three investors also skipped the MNT-Halan and Banque du Caire offerings, preferring to let newly listed shares settle before buying. “I know more than 20 people who didn’t take part in either,” the third investor tells us. Members of his group objected to MNT-Halan on religious grounds, he said, telling each other not to buy into a consumer lender.

The only tool is the sell button

EGX investors have few ways to protect themselves when the market falls. Turnover in weekly derivatives, the market’s main hedging tool, ran under EGP 10 mn in late October in a market worth EGP 3.9 tn, according to Hamed’s figures. “The deeper issue is that investors have almost no way to hedge,” she says. “So the only way to reduce risk is to sell, and in margin accounts, that selling is forced.” That dynamic was already visible in mid-October, before the halt. Liquidity leaving the market pushes prices down, which erodes margin ratios, which forces leveraged holders to sell and pushes prices lower again, Tycoon Securities’ Sameh Gharib told us at the time, describing a snowball effect. Al Ahly Pharos Head of Research Hany Genena put the sequence this way: the big players head for the exit first, the smaller holders sell behind them, and the leveraged ones sell behind those.

Regulators have spent the year building alternatives, but none has caught on yet. The EGX secured its futures license in January, launched index futures in March, and added single-stock futures on CIB and TMG in June. The FRA issued its short-selling rulebook in August, and the central lending pool that short-selling depends on was still in trials ahead of an early-November rollout.

Debt and stocks

A sizable share of retail investors are carrying debt elsewhere while keeping much of their money tied up in equities. That raises the question of how long they can afford to hold on when prices fall. Almost half the respondents to a poll Menthum ran on its WhatsApp channel said they had borrowed through buy-now-pay-later providers while heavily investing in equities, Shrimali says. “If they are paying 50% or so interest rate on their borrowing and still investing in the stock market, their expected return from the market is 50% plus.”

For a while, the market delivered. It returned about 60% in the year to September, enough to cover the interest with some left over. Shrimali’s worry is the assumption underneath: that 50% to 60% a year is normal rather than an exceptional run. He calls that “fantastical.”

The timing of the money matters as much as the debt. Investors are buying equities with liquidity that they’ll need back soon, for an installment next month or school fees in January, Shrimali says. “So the moment the stock market takes a downturn of 10 to 20%, obviously they are panicking because they don’t have spare [liquidity] which is set aside as a safety cushion.”

That lack of spare money could also slow the recovery, since investors who are fully invested and paying interest have nothing left to add. “I don’t think they have extra money to bring into the market to move to the next phase,” Shrimali says. He adds that the next leg of buying would have to come from institutions, foreigners, or high-net-worth investors. So far, there’s little sign of it: foreigners have been net sellers of EGP 13.5 bn this year, and institutions accounted for only a quarter of October’s turnover.

Plenty of investors still expect big gains despite the selloff. In a follow-up poll of its investor community, Menthum found that 23 of 47 respondents expect the EGX30 to gain 30-50% over the next 12 months. Another three forecast gains of more than 50%, and nine expect losses or a correction. Hopes for outsized gains have cooled since September, when seven of 33 respondents expected returns above 50%, against three now, while the share expecting a correction has roughly doubled. More than half still expect gains of at least 30%.

A 10% drop isn’t the thing that breaks you

The halt was the first that most of this cohort had lived through, but analysts worry more about what happens if the market doesn’t bounce back quickly. EGX Chairman Omar Radwan went on television (watch, runtime: 10:55) that afternoon to call the suspension routine. He said plenty of newer investors had never been through a sharp decline and that the answer was to diversify and hold for the long term instead of selling in a hurry. “Some investors don’t know that investment is supposed to be long-term,” Radwan said, adding that seeing someone else sell is often enough to make them sell too.

Shrimali doesn’t expect a drop of this size to change investor behavior much. “This is not the first time we are taking a 10 to 15% dip in the last five years,” he says. He notes that buying the dip paid off on each of the last three occasions because the market came back quickly. That may leave investors used to those rebounds less prepared for a market that stays down.

A long flat stretch would test them more, Shrimali says. “If the market goes down further, or if the market stagnates at this particular level for a longish period, and for the retail kind of investor, I would say even two months is longish enough for them, they would suddenly start feeling the fatigue,” he says. That’s when investors start running the numbers: “Hey, over the last six months, I was minus 6%. Over the next two months, I am 0%. Am I doing the right thing with my money?”

The bigger long-term worry is what a painful downturn could do to a whole generation’s appetite for stocks. “Once they feel the burn, some will fall, and some will blame the new fintechs and how easy it is,” Menthum co-founder Ismail Sarhank tells us. He points to his parents’ generation, who still hear “stock market” and think of money lost. “Our generation still didn’t see it. We’re not okay with seeing our money down. We never took it, even in schools or in universities. It was never in our DNA.”

OUR TAKE- Conviction means little without the liquidity to back it, especially for investors carrying debt at rates of up to 50% with repayments and other commitments looming. October showed that retail investors were willing to hold on through a sharp selloff, with some buying more. A prolonged slump would be a much harder test for those who can’t afford to wait for the recovery.